AT&T’s Lindner paints optimistic picture

AT&T is very optimistic about its immediate future and that includes its U-verse IPTV service, Chief Financial Officer Rick Lindner told the Citigroup 17^th Annual Global Entertainment Media and Telecommunications Conference today.

Acknowledging the questions about U-verse, which fell short of the original projections for deployment in 2006, Lindner, who is also executive vice president, said AT&T is “pleased” with how the product is performing to date and the bandwidth it is generating.

“We get lots and lots of questions about U-verse and IPTV,” Lindner said at the event, which was Webcast from Las Vegas. “I know there is a lot of concern about whether the product will work--and much of that is centered around [whether] the fiber-to-the-node architecture will work and supply enough bandwidth. The concern is that we will be coming back and announcing a large capital program to take fiber to the home. What I would tell you is that we are pleased with the rollout at this point. We would always like it to go faster--we’re more impatient than all of you here in terms of wanting to see revenue.”

The complexity of U-verse and the fact that it requires new software, new set-top boxes, and new operations and support systems for provisioning and customer service has slowed the ramp-up, but that is underway now, Lindner said.

“The issues have nothing to do with fiber to the node,” he added. “We are pleased with the bandwidth we are getting – it is greater than we expected to have with the outside plant architecture at this time.”

In addition, changes coming in the second half of 2007 will enable AT&T to increase the available bandwidth by 60% to 70%.

“We’re pleased with the product so far,” Lindner said. “The platform is stabilizing, you will see us beginning to ramp it up in terms of households. We are going to be methodical because we want the customer to have a good experience.”

Lindner also defended AT&T’s two-pronged video strategy, saying the HomeZone product, which combines AT&T Yahoo! DSL service with digital video from DISH Network, is what has enabled AT&T to take the time it needed to roll out U-verse and is likely to be used for some time to come to reach customers not on the FTTN upgrade path.

Overall, Lindner painted a rosier picture than in past years, saying industry conditions have improved, demand is strong particularly for wireless and wireless data, broadband access and business services, and AT&T expects to return to overall revenue growth in the coming year, after six quarters of double-digit earnings per share growth.

One significant move the company has made, he said, was to lower and simplify its voice services packages, to make it easier both for its own call center personnel and for outside agents to sell.

“Another thing we have begun is working to simplify the bundles and the pricing we have both for DSL services as well as bundles of voice services, vertical services and long-distance,” Lindner said. “That makes it more efficient in our call centers, because it’s an easier set of services to sell and explain to customers, and going forward [we will] begin to sell those services through other distribution methods. We will begin selling DSL through an agent agreement with WalMart, and sell DSL and U-verse with Cingular. It adds value and will help us increase ARPU in terms of the overall ARPU we generate.”

The AT&T CFO also touted a total of $9 billion in cost savings generated by the series of mergers that began with AT&T Wireless and Cingular and including AT&T/SBC and now AT&T/BellSouth.